- Continuing a trend that’s been going on for years, UScellular reported a loss of 38,000 postpaid phone customers in Q1 2025
- CEO Laurent Therivel blamed UScellular’s lack of size and scale and said it’s all the more reason to sell its wireless assets to T-Mobile
- UScellular is getting pushback from consumer advocacy groups that say the merger will be bad for competition
UScellular’s management thinks towers will be a great business, which is good because its current cell phone business is just as bad as ever.
UScellular lost 38,000 postpaid phone customers in Q1, which is better than the 47,000 phone customers it lost in Q1 2024, but it’s still going in the wrong direction. Service revenues, at $741 million, were down 2% compared to the year-ago quarter.
“Our size and lack of scale makes it difficult to sustain this balance of high promotional expense and reduced investment. That's why we continue to believe the transaction with T-Mobile is in the best interests of our business and our customers,” said UScellular President and CEO Laurent Therivel in prepared remarks during the company’s Q1 earnings call Friday.
UScellular’s customer losses have been going on for years, in part due to increased competition from cable. Instead of focusing on metro markets, UScellular moved to less populated areas that are more costly to serve and rivals followed them – including cable companies through MVNO arrangements with Verizon.
UScellular’s plan to sell
A plan was announced a year ago to sell UScellular’s wireless assets and 4 million customers to T-Mobile for $4.4 billion. The companies expect to close their transaction by mid-2025, but they still need to get regulatory clearances and some consumer advocacy groups are pushing back, saying it’s bad for jobs, prices and wireless industry competition.
UScellular CFO Doug Chambers said on the earnings call that $100 million of the $4.4 billion purchase price is contingent on UScellular achieving certain performance targets and it doesn’t expect to reach those metrics, so the actual size of the transaction is going to be closer to $4.3 billion.
As part of the merger agreement with T-Mobile, over half the UScellular employee base will be offered jobs, with severance packages given to those who don’t make the transition.
Upside in towers
Some employees also will remain with UScellular’s remaining tower business, where it’s seeing increased volume in co-location activity. Third-party tower rental revenues in Q1 2025 increased 6% year-over-year.
One of the reasons for the uptick, according to Therivel, is UScellular changed from a third-party sales and marketing model to in-house. The tower portfolio includes 4,413 towers and will remain UScellular’s primary line of business after it closes the deal with T-Mobile.
Therivel has previously talked about how UScellular’s towers are geographically unique in that they’re in hard-to-reach areas that are not covered by a lot of other towers. In fact, relatively few competing towers are within a mile or so of UScellular’s towers, he said. That’s important as wireless carriers expand and densify 5G coverage to keep up with demands for data.
On the fiber side of the house, UScellular parent company TDS reported 14,000 new fiber service addresses in Q1 and maintained its goal of reaching 150,000 fiber addresses this year.